I have chosen to base my assignment on the following two businesses: Sole trader- Errol Anderson Motors and PLC-J-Sainsbury's.

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I have chosen to base my assignment on the following two businesses: Sole trader- Errol Anderson Motors and PLC-J-Sainsbury's

I have chosen J-Sainsbury's as my PLC because J-Sainsbury's is a well-known retail company, which sells over 23,000 products on their shelves and many household products. J-Sainsbury's comes under the tertiary sector as they provide a service.

Also I chose to do J-Sainsbury's because I have already done a coursework on J-Sainsbury's in another unit so I have all the information I need.

For Sole Trader I have chosen Errol Anderson motor that provides a car repair service in Harrow.

The reason I have chosen Errol Anderson Motors is because I don't know any Sole traders, so instead my teacher gave me a case study on Errol Anderson Motors from which I got my information. Also Errol Anderson Motors is situated in harrow, which is very close to me so I can go there to see the area.

Main Features of Errol Anderson Motors

The Sole trader is simplest form of business organisation. This type of business is owned by one person- although he or she may employee other people to work in the business.

A Sole Trader is some who decides to own and run his or her business and most probably use personal savings as capital to start up the business.

Setting up a Sole Trader can be the least expensive way of starting up a business because Sole Traders normally start of businesses from small premises such as warehouses and shops which don't cost a lot of capital to start compared to J-Sainsbury's which will need a lot of capital to start as it is a big supermarket.

If the business is successful the Sole Traders reward will be the profit which the Sole Trader can keep all to himself as he is the only one to own the business. But if the Sole Trader makes losses and goes into debt then the Sole Trader may have to pay off the debts will his personal savings, which may even mean in selling his cars, houses and other personal belongings.

There are many advantages and disadvantages of being a sole trader,

Advantages

. Easy to set up.

2. You are your own boss, so there is no one telling you what to do, as you have total control of the whole business.

3. Simplicity- there is no forms to fill in to start trading

4. You get all the profits you have made.

5. You can put your decisions into effect quickly because there is no on else to consult.

6. A Sole Trader can be flexible as to working and opening hours and which days to open.

Disadvantages

. You will be working long hours to meet all the deadlines.

2. You are the only person, who owns the business, so you have "Unlimited Liability"

3. You may only know have limited skills.

4. If you are ill you will and your business is closed the owner will make no money.

5. If the owner gets into debts then he will have to pay them off with his personal savings.

6. Difficult to raise capital to expand the business.

Errol loved working with cars and when he was at school he went to a local garage for his work experience. Mr David Turner who was the owner liked the way Errol worked so he gave him a Saturday job.

At the end of year 11 in 1989 Errol went on to college to do a course on car mechanics.

Mr Turner had to leave the business so Errol decide to buy it because he knew enough information about the business.

Mr Turner decided to sell his business to Errol and also gave him a period of 2 years to pay up the money for the tools and equipment.

Errol started up his business by getting some capital from his family, a small loan and a loan from the prince's trust to pay of to Mr Turner.

"Unlimited Liability" is where the owners of the business are responsible for all the debts the business incurs. So this means if the owner has not got enough money to pay of his debts he or she will have to sell of their personal belongings such as, t.v's, house and car to settle the debts

Main Features of J-Sainsbury's

J-Sainsbury's is a plc. A plc is a company whose shares are traded though the stock exchange. The shares can be bought buy any person who may be interested. As J-Sainsbury's is a plc it is easy to obtain information of the company because they have to publish accounts every year because they have to inform the Companies house and the shareholders. When J-Sainsbury's publish accounts the shareholders know how J-Sainsbury have done in the year and if the results are good then more people will be interested in buying shares in the company.

People who have Sainsbury's shares are known as the owners. But the shareholders do not run the company. Boards of directors are appointed by the shareholders to run the company. The boards of directors have to mange the company. The shareholders have ultimate control of the company, as they are the owners.

J-Sainsbury raises capital from taking out bank loans from banks and other financial institutions. Also they raise capital through the sales of their shares.

The liability of J-Sainsbury's is limited. This means that the owners (shareholders) of the business lose only the money they invested in the company if the company goes bankrupt their personal wealth is not at risk

To start a PLC its capital comes from its sales of its shares through the stock exchange and also from the profits. A Company must have more than £50,000 before it can "go public" and must have a satisfactory financial track record. Also it is very important to have enough people interested in buying sharers for it to have a successful flotation.

Advantages

. By having thousands of people or organisation interested in your shares it makes expansion easier.

2. Public limited can be quite small which needs to have 2 directors and 2 shareholders.

3. Very large plc can operate more cheaply than small companies as they operate on economies of scale. This means that large companies can mass-produce goods for sale and buy in bulk to save more money. E.g. like J-Sainsbury's.

4. If the company is successful, the shares will increase in value and this will increase the overall value of the company. For example J-Sainsbury's shares where 244p on October 22nd 2002 and now the value has increased to 298p. So the value of the overall company has increased too.

Disadvantage

. A plc must be registered as such with a Registrar of Companies and has many external regulations to comply with. This means any problems a company encounters may become news if the press run a story on it.

2. An annual general meeting must be held every year inviting all the shareholders. Any shareholders that do not agree with the way the company is managed may raise an objective or vote against the directors.

3. All accounts must be published every year so the company cannot hide a problem year.

4. Shareholders will expect to receive a dividend. They will want the share value to increase. If the share values decrease then this will make the shareholder want to sell their shares, which will make the companies value go down.

5. If the company goes bankrupt then you will loss all the money you have invested in the company.

J-Sainsbury's is a complicated business ownership because the business is too large to be run as a sole trader as Sainsbury's has 463 stores throughout out the UK it will be impossible for 1 person to run all these stores with a high standard of service. Also it will be impossible for the sole trader to raise that type of capital. Therefore it suits J-Sainsbury to trade as a plc.

Anderson Motors is less complicated then Sainsbury's. I say this because Errol Anderson motors is a Sole Trader and not a limited company and this means no shares are involved and there are fewer documents to go through and fewer laws to control his activities.

Sainsbury's have to produce documents called the

Memorandum of Association and Articles of Association.

The Memorandum sets out the constitution and gives details about the company. The company Act 1985 states that the following details must be included: -

. The name of the company.

2. The name and address of the company's registered office.

3.The objectives of the company, and the scope of its activities.

4.The liability of its members

5. The amount of capital to be raised and the number of shares to be issued.

The Articles of Association, deal with the internal running of the company, these include details such as: -

. The rights of the shareholders depending on the type of share they hold

2. The procedures for appointing directors and the scope of their powers;

3. The length of time directors should serve before re-election.

4. The timing and frequency of company meetings.

5. The arrangements for auditing company accounts.

These documents have to be sent to companies' house when they apply for plc structures.

A plc must also have a document called a Statutory Declaration provided. This is a document, which states that the requirements of all the company acts have been met.

Memorandum of Association and Articles of Association are given to the companies' house. After the companies house have checked the Memorandum of Association and Articles of Association and are satisfied they will issue a certificate of trading then a company and trade as a plc

Task 2

The main activity of Errol Anderson motors

There are two different types of activities in a business a "core" activity and a "peripheral" activity.

A "Core" activity is the main dealing of the business and is the most important activity for the business and usually generates the largest and usually generates the largest amount of income. For example, a car showroom's core activity would be selling cars, and an electrical stores core activity would be selling different types of electrical goods.

A "Peripheral" activity is not needed by a business but if a business does have a peripheral activity this will result in the business getting an increase of profit, for example, a car showroom's core activity is to sell car's but can also provide a peripheral activity of providing a loan with interest, and a electrical stores core activity is to sell different types of electrical goods and can also provide a peripheral activity of providing extended guarantee with the products costing the customer a little extra.

The core activity of Errol Anderson motors is to provide a service to his customers by repairing their cars and other motor vehicles. Errol Anderson motors does not have a peripheral activity as fare as I know. I think the reason he has not got any other activities is because he has not got enough time and Errol Anderson has only limited skills.

Errol Anderson motors has many competitors to try and beat, but there is no competitor that is very close to him, for example there is no other motor repair garage right next to him. Some of Errol Anderson motors competitors are, kwik fit, Euromasters and other garages which provide a

Service of repairing cars. I think some car owners will not go to big garages such as BMW, ROVER and FORD because they all normally more expensive.

Errol Anderson motors main customers are going to be friends, residents, small business and households and other small businesses in the area.
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Errol Anderson motors will come under the Tertiary sector because he provides a service. Errol Anderson motors is a motor repair industry.

In recent years, motor repair industries are making more profits; this is because more and more people are buying cars so this will boost the motor repair industry. We can see from graph D that more and more people is being hired to work in the tertiary. Also we can see that tertiary sector is still growing in the number of people employed.

The main activities of J-Sainsbury's

Retailing industry:

Retailing involves ...

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